KBC Bank has become the latest mainstream lender to sell loans to a third party.

The bank confirmed that it has sold what it said was a small portfolio of loans to another entity.

It said that the transaction related to homes and investment properties that had now been sold, but not all the original mortgage debt had been cleared. It comes weeks before the Belgian-owned lender is due to make a decision on whether to exit the Irish market.

The call by its Belgian parent on whether to stick with KBC Ireland, and possibly ramp up the brand, or exit the now profitable business will be announced along with its financial results on February 9, the bank said last week.

Now it has emerged that KBC Bank has sold loans to credit-servicing and debt-collection firm Cabot Financial Ireland.

Cabot is regulated as a credit servicing firm, but does not have a banking licence.

The move to sell - the first time KBC Ireland has sold loans - has prompted fears about the future of the bank here.

It comes after a renewed focus on the sale of mortgages across the banking system to vulture funds.

The sale of the KBC portfolio is understood to involve more than 100 loans - most of which related to buy-to-let properties that have been sold - but money is still owned on the original mortgages.

"KBC Bank Ireland can confirm the sale of a small portfolio of loans relating to unsecured residual mortgage balances where the properties have already been sold," said the bank.

"KBC has notified affected customers, and their existing contractual rights and protections will transfer with the sale."

The bank would not say how many loans were sold, but insisted it had only sold debts where a home or buy-to-let property was surrendered to the bank, but money was still owed on the original loan.

It is understood the loan portfolio sale does not relate to any decisions on the future of the brand here.

One poster on Askaboutmoney.com outlined how a residual debt he owes was sold to Cabot, even though he is due to take out a new KBC mortgage.

David Hall of the Irish Mortgage Brokers Association said the sale of the loans was causing fear among borrowers, and raised questions about the future of the bank here.

"It also points to the fact that no-one should hand back the keys of a home until they have a deal on the residual debt owed," he said.

Meanwhile, a banking trade union said there was "significant concern" among KBC Bank staff about the bank's future.

The general secretary of the Financial Services Union, Larry Broderick, said: "This uncertainty cannot be allowed to hang over bank staff for the next month."

He said it was not clear if the bank would retain its operations as they are in this country. The bank could also decide to merge with another bank, or sell it on, he said.